Social, Environmental and climate related topics affecting supply chains resilience

European companies are increasingly challenged by social, environmental, and climate-related regulations, driven by legislative initiatives like the German Supply Chain Act and the EU Corporate Sustainability Due Diligence Directive. These regulations necessitate comprehensive compliance measures, impacting supply chain resilience, particularly for SMEs, while also presenting opportunities for innovation and competitive advantages in sustainability. The ReSChape project aims to analyze these challenges and develop strategies to enhance supply chain sustainability and resilience through stakeholder collaboration and innovative models. JUNE 2025 PROJECT PARTNERS KEY HORIZONTAL ISSUES FOR EUROPEAN SUPPLY CHAINS SOCIAL, ENVIRONMENTAL AND CLIMATE RELATED TOPICS AFFECTING SUPPLY CHAIN RESILIENCE page 2 INDUSTRIAL BRIEF Introduction European companies have to face social, environmental, and climate-related issues in their design and operations of supply chains. Triggered by legislative initiatives such as the German Supply Chain Act (LkSG) and the EU Corporate Sustainability Due Diligence Directive (CSDDD) as well as market pressure from their respective customers, businesses are expected to go beyond internal compliance and ensure that their global suppliers meet the rigorous ESG standards. The growing importance of climate resilience and decarbonisation further intensifies the demands on companies to adopt low-carbon operations and manage climate risks. While this shift is critical for sustainable development, it poses major challenges, particularly for SMEs, due to the financial, technical, and administrative resources required for compliance. Importance for European Supply Chains Social, environmental, and climate-related regulations have become a pivotal factor in shaping the future resilience, competitiveness, and sustainability of European supply chains. With growing regulatory demands from directives like the CSDDD and national laws such as the German Supply Chain Act, companies are increasingly required to ensure transparency, human rights compliance, and environmental responsibility not just within their operations but throughout their global supply networks. This is particularly relevant in sectors like textiles, food, and automotive, where complex, international supply chains are common. For European supply chains, these regulations introduce both challenges and strategic opportunities. On one hand, they necessitate significant investments in compliance infrastructure, reporting systems, and due diligence mechanisms. On the other hand, they can drive innovation, risk mitigation, and long-term resilience. Supply chains that adapt early gain a competitive edge through improved ESG ratings, consumer trust, and access to sustainable finance. Conversely, failure to adapt may result in legal risks, reputational damage, and declining market access, particularly in sustainability-conscious markets. page 3 INDUSTRIAL BRIEF Analysis Approach The researchers of the ReSChape project identified 127 risks impacting the resilience and sustainability of supply chains and the aggregated these issues into five sector-independent key horizontal issues. Therefore, we used established supply chain frameworks, particularly the Supply Chain Knowledge Framework of Christopher, the Supply Chain Operations Reference Model (SCOR) and the SCM task model from Fraunhofer IML. Subsequently, we have analysed stakeholder positions and performed an online survey as well as expert interviews. This was accomplished with a cross-country policy analysis (see fig. 1). Figure 1. Analysis approach page 4 INDUSTRIAL BRIEF Major topics regarding social, environmental and climate related issues for supply chain operations Increased Reporting Obligations and Regulatory Complexity Businesses face burdensome data collection and compliance documentation demands, requiring new IT systems and specialist staff, with SMEs disproportionately affected. Supply Chain Transparency Companies must ensure traceability and compliance along global supply chains. Risks include greenwashing, consumer mistrust, and difficulties due to differing international standards. Risks of Penalties and Legal Consequences Non-compliance can lead to fines and reputational damage, requiring robust internal processes to avoid legal consequences. Costs for Compliance Compliance leads to high direct and indirect costs, including investments in technology, training, and legal oversight. This affects competitiveness and can reduce profit margins, especially when consumers are unwilling to pay more for sustainable products. Competitiveness and Market Position Sustainability performance increasingly influences brand image and investor confidence. Companies failing to meet expectations risk reputational loss, reduced customer loyalty, and declining ESG ratings. Companies are now more than ever required to ensure that human rights and environmental protection are respected and promoted not only within their own companies, but also throughout their supply chains. To this end, regulations and laws have been introduced in recent years that oblige companies to act sustainably in the interests of society. We have summarized the associated changes affecting the resilience of European Supply Chains in the following five topics: page 5 INDUSTRIAL BRIEF Stakeholders Positions We have identified and screened reports, positions papers and online statements from various stakeholders and grouped the summarized positions into the following four stakeholder groups: Private Sector • Harmonisation and Legal Clarity: Business associations call for a uniform implementation of the CSDDD across EU member states to avoid legal fragmentation. They stress the need for a risk-based approach and oppose additional civil liability provisions. • Support for SMEs: Stakeholders recommend reducing the compliance burden on SMEs through simplified requirements, safe harbour clauses, and clearer guidance. • Incentives for Innovation: BDI encourages policies supporting circularity, digitalization, and partnerships to improve sustainability. BusinessEurope highlights the need for EU funding to support green infrastructure and the hydrogen economy. Labour Unions (ETUC) • Stronger Enforcement and Human Rights Focus: The ETUC criticises the CSDDD for lacking a people-centred approach and calls for enforceable labour clauses in trade agreements, effective redress mechanisms, and better involvement of trade unions in corporate due diligence. • Structural Trade Reform: Unions advocate for sanctions against unfair labour practices, revision of the GSP framework, and policies to fight social dumping. • Inclusive Industrial Policy: Workers must be involved in shaping the industrial transformation. Short-time work programs with training should be implemented to support transitions. NGOs • Early and Ambitious Transposition of CSDDD: Oxfam demands legal certainty and accountability for companies and victims, urging for timely implementation by member states. • Stronger Environmental and Human Rights Protections in EUDR: Greenpeace and others call for clear definitions, robust due diligence requirements, protection of Indigenous rights, and access to justice. • Right to Repair: The coalition calls for products designed for durability and repairability, open software access, and freedom of repair choice for consumers. page 6 INDUSTRIAL BRIEF European Technology Platforms and EIT Initiatives • ALICE-ETP and POLIS Network: • Advocate a holistic transition approach involving clean fleets, collaborative logistics, and smart governance. • Recommend accelerating innovation (e.g., “Physical Internet”) and integrating energy infrastructure for urban logistics. • Emphasize the role of consumer engagement and digital standardisation in enabling transparency and sustainable delivery models. • ERTRAC: • Recommends optimizing infrastructure-vehicle ecosystems using intelligent traffic tools and performance-based standards. • Stresses the urgent need for resilient energy infrastructure (e.g., for hydrogen and electricity) that is safe, affordable, and adaptable. page 7 INDUSTRIAL BRIEF Expert Consultations and Online Survey Feedback In-depth interviews and an online survey with supply chain management experts – from industry, the public sector and NGos – resulted in the following issues: • Administrative Burden: Experts and survey respondents stress the need for simplified, standardised reporting frameworks and digital tools across EU countries. • Bridging Policy and Reality: There is a strong call for transitional measures like subsidies, awareness programmes, and industry-specific support—especially for SMEs. • Gaps in Infrastructure and Technology: Stakeholders warn about the lag in viable electric vehicle options and insufficient infrastructure to meet upcoming environmental targets. • Supply Chain Resilience: Experts recommend strengthening institutional structures, supporting traceability systems, and expanding certification mechanisms to monitor informal or micro supply chains. • Societal Role of Industry: Industrial transformation must maintain social cohesion, with policies accounting for the role of industry in providing integration and opportunity—especially for vulnerable groups. • Consumer Behaviour and Environmental Impact: Some experts suggest implementing visible tools (e.g., colour-coded systems) to communicate the ecological impact of delivery options. • Scepticism on Practical Feasibility: Several business representatives highlight dissatisfaction with current policy designs, pointing to market unpreparedness and the risk of losing competitiveness due to uneven global standards. Conclusion and Implications The implementation of social, environmental, and climate-related regulations represents both a significant challenge and a transformative opportunity for European supply chains. While the European Union has made commendable progress in setting ambitious goals for sustainability and social responsibility, the ReShape summary highlights a persistent gap between political ambition and on-theground feasibility. Effective transformation requires more than regulation—it demands coherent policy ecosystems that integrate industrial, environmental, and social objectives. There is broad consensus among stakeholders that immediate and coordinated action is necessary to avoid economic dislocation, supply chain disruptions, and social fragmentation. This includes targeted financial support, inclusive governance, digitalisation of compliance procedures, and improved infrastructure. Ultimately, sustainable and resilient supply chains must be built on transparent standards, technological innovation, and the active involvement of all societal actors—from multinational corporations to SMEs, from public institutions to civil society. Bridging vision and reality remains a central task in ensuring Europe’s leadership in the global green transition. page 8 INDUSTRIAL BRIEF The analysis carried out identifies areas for action to maintain the competitiveness of European supply chains in the long term. It becomes clear that stakeholders have different priorities depending on their respective perspectives. Overall, however, the following areas of responsibility can be identified: • The task of policymakers is to reflect on and, where necessary, adapt legislation, in particular with a view to harmonizing legislation across Europe and simplifying compliance requirements. • The private sector should rethink its business processes and models, which are often focused solely on costs and shareholder value. • Business associations, trade unions, NGOs, and academia must contribute their respective expertise more to improving relevant policies. page 9 INDUSTRIAL BRIEF References BDA (2022). EU-Wertschöpfungskettenregulierung: Viel Verbesserungsbedarf. Retrieved from https://arbeitgeber. de/eu-wertschoepfungskettenregulierung-viel-verbesserungsbedarf/ BDI & Deloitte (2024, November 18). Supply Chain Pulse Check. BusinessEurope (2022, July 19). Climate, Standardisation, and EUDR Position Paper. BusinessEurope (2024, July 24). Energy and Climate Transition Position. BusinessEurope (2022, May 31). 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